JPMorgan chief U.S. equity strategist Tom Lee's year-end target for the index was 1775. However, given his continued constructive view on the stock market, he raises his year-end target to 1825 today in a note to clients.

"In our view, the case for continuing to maintain a positive stance on equities remains in place given: (i) improving economic momentum to support upward EPS revisions (pent-up demand in U.S. housing, autos, construction, capex and a recovery in the euro area); (ii) attractive relative value (particularly vs. corporate bonds), (iii) supportive monetary policy and (iv) sentiment that is not excessively bullish," says Lee. "We continue to believe that the U.S. is in a secular bull market and that remaining constructive on equities is warranted."

Lee says half of the 50-point increase in his S&P 500 target is driven by the tech and financials sectors.

"Much of the increase into year-end (50 points) is driven by sectors with lower P/Es, which we expect to re-rate higher into YE, with half of the points coming from Technology and Financials," says Lee. "Both trade at roughly a 10% discount to the S&P 500."

Despite the positive outlook, there is one threat to a higher stock market on Lee's radar.

"The biggest risk to our thesis, in our view, remains the potential for a negative monetary policy surprise (more likely in the U.S. than Europe)," he says. "That is, we believe equities remain uncomfortable with the notion of asset tapering without the economy at perceived escape velocity."

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